FORTIS ET LIBER: IRELAND - THE CASE STUDY OF AN INVINCIBLE ECONOMIC FREEDOM

Viewed from Washington, it's hard to believe the Ireland depicted in the film The Commitments even existed 15 years ago. When the 20-somethings depicted in that movie discussed career opportunities, the inevitable question was: "When are you going?’' As in - to the US for a job. Not any more.

Instead of hampering unemployment Ireland imports foreign skilled labor force today. Irish economic growth is no little or just even a bit, but it increasingly puts world average out of business. Once the sick man of Europe now rapidly became the bite-roaring Celtic tiger, with prosperous future far better than continental economies. In my opinion Irish conventional wisdom went directly to the point and enabled people to pursue their dreams easier. The key instruments for such a welcoming philosophy have been pro-growth and pro-market oriented reforms that let Ireland third-freest economy in the world (Heritage, 2006).

In the previous year Irish economy grew steadily at a rate of approximately 5% which is very much better than the vast majority of world economies. Ireland now remains a U.S. center for foreign investment and it present nearly a third of U.S. investment in the EU. According to close ties with the U.S., Ireland remains world largest exporter per capita. In the last decade Ireland attracted about 25% of fresh and new U.S. investment. The flow of the latter was nearly 9,1$ billion in 2003 which is two and a half times the amount of U.S. investment capital flows into China nowadays.

Ireland is also one of the easiest places to start doing business. It only takes a few days to start it. Very strongly recognized component of Irish economic boom is advanced and competitive financial system. Banking industry is diverse with around 90 banks and other credit institutions authorized to conduct business in 2002, most of which are foreign. Dublin has attracted a number of foreign banks through its International Financial Services Center, which offers banks a corporate tax rate of 12.5 percent. European Commission unfortunately failed when she has treated this very low corporate tax rate as an aid to banking industry. Irish deserves its place among open-market countries. Around 100 banks currently operate in China; most of them are situated elsewhere. Their licensed credit institutions have financial assets that result 400% of Irish GDP which is the second-best such ratio in Europe, only behind Luxemburg (Miles, 2006). Ireland has successfully resisted adopting EU efforts to harmonize taxes at a single tax rate.

Ireland is probably a world record holder when the question takes place in government intervention. Quite remarkably Irish government consumed 14, 4% of the GDP. Only about 2% total revenues were received from state-owned enterprises. Irish cut in government consumption could have been even more impressively improved if Ireland reduced its top marginal income tax rate from its current 42%.

Another increasingly important sustainability of Irish economic growth is flexible labor market and low social security payments. The major origins of Irish dynamic economic growth take place in the early 1990s when Irish government slashed corporate tax down to 12, 5% and continually took other measurements to unleash nation’s competitive entrepreneurial wealth.

Irish judicial and civil service system is continually regarded as fair, highly professional, competent and sound. Foreign and domestic investors can thus be safe that their property will not be expropriated. Even legal obligations take high place in terms of moral values according to Irish strong dedication to Anglo-Saxon way of living. Contractual agreements are safe and judicial staff is of high quality. Corruption is by and large not a serious problem for investors in Ireland. Especially significant effect on Irish competitive market has (compared to EU) less restrictive labor force regulation which lets labor market to be one of the most dynamically flexible among world economies.

My opinion is that free market policies allow economies to absorb financial and other stocks more quickly with less long term negative circumstances. Thanks to this economic flexibility Ireland remains a well-confident friend of economic freedom based upon the foundations of impressive economic growth and enhanced market prosperity.